Published August 25, 2006
SAN FRANCISCO – Apple Computer Inc. (AAPL) will recall 1.8 million lithium-ion notebook computer batteries after nine devices overheated, causing minor burns to two users, U.S. safety regulators said on Thursday.
The recall is the second-biggest in U.S. history involving electronics or computers. Just last week, No. 1 PC maker Dell Inc. (DELL) recalled 4.1 million lithium-ion batteries.
In both cases, the batteries had power cells made by Sony Corp. (SNE) Apple, like Dell, said it did not expect any "material" financial impact on its business.
The move brings to nearly 6 million the number of notebook batteries recalled in the past 10 days and highlights the potential hazards of lithium-ion batteries, which also power a wide range of portable devices, including music players and cellphones, analysts said.
"Sony clearly has a problem here," said Tim Bajarin, principal analyst at Creative Strategies in San Jose, California. "There's a problem with the batteries overheating."
Bajarin noted, however, that in Apple's case there were no reported notebook fires, while several of the recalled Dell computers had erupted in flames. Dell said it had reports of six batteries overheating, but no injuries were reported.
About 100 million notebook computers are sold annually worldwide, Bajarin said. They are the fastest growing segment of the personal computer market.
Sony on Thursday said in a separate statement that it did not anticipate further recalls of batteries using the potentially faulty cells.
The Japanese electronics company said the Apple and Dell recalls would cost Sony between 20 billion yen and 30 billion yen, or $172 million to $258 million.
Cupertino, Calif.-based Apple will recall 1.1 million batteries sold with notebook computers in the United States and 700,000 abroad, the U.S. Consumer Product Safety Commission said.
"Our No. 1 priority is to recall and replace the affected batteries free of charge," Apple spokesman Steve Dowling said. The reported overheating incidents were due to "contamination" in the Sony battery cells, he said, but added that he did not have further details.
Roger Kay, president of market researcher Endpoint Technologies Associates, said the affected Sony battery cells may overheat or catch fire when tiny metal fragments, remnants of the manufacturing process, break loose and cause short-circuits.
Dell also pointed to "contamination" in the Sony battery cells as the cause of its problems.
The batteries were sold with Apple iBook G4 and PowerBook G4 computers from October 2003 through this month, according to the safety commission. None of Apple's most recent notebooks using microprocessors from Intel Corp. (INTC) are affected, Dowling said.
Apple had said last week after the Dell recall that it was reviewing its notebook batteries to ensure they met its standards.
"The key message to consumers is these lithium-ion batteries can actually overheat and pose a fire hazard," said Scott Wolfson, spokesman for the Consumer Product Safety Commission in Washington.
Shares of Apple closed up 50 cents at $67.81 on Nasdaq. Earlier, they had dipped as low as $66.27 after the recall announcement.
The recall follows a smaller Apple recall of lithium-ion batteries in certain iBook G4 and PowerBook G4 notebooks sold worldwide from October 2004 through May 2005. Those batteries were made by LG Chem Ltd. of South Korea, according to Apple's Web site.
Dell, of Round Rock, Texas, last week began a voluntary recall of 2.7 million batteries sold in the United States and 1.4 million sold overseas. The Dell-branded batteries were in computers sold from April 2004 through July 18 of this year.